Category Archives: White-Collar Crime

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Conrad Black’s battle to retain his Order of Canada designation will not be resolved quickly, much to his dismay.

Upon receiving notice that the Governor-General’s Advisory Council was reviewing his membership in the Order of Canada, Lord Black sought an opportunity to make oral submissions to the Council, a suggestion rebuffed by them. His attempt to obtain a court order from the Federal Court also failed when they ruled that the removal process only permitted written submissions.

Mr. Black filed an appeal to the Federal Court of Appeal and brought a motion asking the Appeal Court to expedite his appeal hearing, however, he ran into a roadblock when the Court refused to move his case to the front of the line.

The expression “justice for all” comes to mind, or in this case, the delay in Canada’s justice system is an annoyance that does not differentiate between rich or poor, high-profile case or minor nuisance, or expensive lawyer or legal aid.

What it does underscore, however, is the frustration of litigants who wait not months, but years, to access what is reputedly one of the world’s leading justice systems, and everyone is complaining.

Chief Justice Beverly McLachlin, who also happens to Chair the ten-member Advisory Council,in a recent speech at the Empire Club in Toronto, identified “delay” as one of the greatest challenges to our court system. She noted that murder trials that used to occupy five to seven days of court time, now take five to seven months and quoted statistics that an average trial in Vancouver in 1996 took 12.9 hours and only six years later, required an average of 25.7 hours to complete.

Mr. Black is waiting for a date in the Federal Court, a system that is bogged down by thousands of immigration cases and no wonder, when you consider cases like Parminder Singh Saini, a convicted hijacker who entered Canada using a false name and then tied up the Federal Court system for fifteen years in his attempts to avoid deportation.

Meanwhile, Ashley Smith, the young woman who died in prison custody and is now the subject of a coroner’s inquest in Toronto, filed a grievance with the Federal Court, who has jurisdiction over prisons and inmates, that was only opened two months after her death.

So now Conrad Black is at the back of the 12 to 18 month line-up that plagues not just the Federal Court but Provincial and Superior Courts across Canada.

Welcome to the world of single mothers waiting for child support hearings; wrongfully dismissed employees longing for recompense for lost wages; car accident victims who desperately wait for their damage awards and tens of thousands of others who still want to believe that Canada has the finest justice system in the world.

Elder abuse is a world-wide phenomenon that has only recently received the attention and research dollars that it deserves. For our senior citizens who are victims of caregivers or family members, the emotional and physical damage and financial exploitation is often hidden behind closed doors.

Such is the case in a recent elder abuse situation in Missouri that has now been exposed by authorities who have charged Kansas City lawyer, Susan Elizabeth Van Note, age 44, with first degree murder and felony forgery.

Ms. Van Note’s 67-year-old father and his long-time girlfriend, who he intended to marry, were attacked by an intruder in their Ozarks vacation home. Mr. Van Note’s girlfriend, Sharon Dickson, age 59, did not survive her gunshot wounds and died at the scene.

Mr. Van Note survived and was transported to hospital, but died four days later, after his only child, Susan, gave his medical team a durable power of health care attorney, that authorized her to determine whether or not to “pull the plug”. She decided that life support should be terminated. With the death of her father and his fiance, Susan Van Note became the beneficiary of his multi-million dollar estate.

Authorities later determined that the power of attorney was a forgery.

A September 2012 criminal indictment against Ms. Van Note says that she “knowingly caused the death of William Van Note by shooting him…either acting alone or by knowingly acting together with or aiding another or others” and used a forged power of attorney to deny him potentially life-saving treatment. No charges have yet been brought against her in respect of the death of Sharon Dickson.

Two high school friends of Ms. Van Note’s have also been charged with felony forgery and second degree murder. Desre and Stacy Dory also plead not guilty.

Not surprisingly, Ms. Van Note was removed as the executrix of her father’s will and was ordered to relinquish control of the assets in her father’s estate. She did, however, manage to post cash bail of $1 million dollars after pleading not guilty, a situation that has caused concern because Ms. Van Note filed for bankruptcy the year before her father’s death, claiming assets of $250,000 against debts of $375,000.

The obvious inference is that Ms. Van Note has already helped herself to estate assets.

They say there is a sucker born every minute and I have to agree. The number of Ponzi schemes that have unravelled in the last several years is remarkable. The wave began with the outrageous scandal that Bernie Madoff created when it was discovered he had defrauded $160 billion from his closest friends, his family, and the public for several decades, while he became a fat-cat at the expense of everyone he encountered, including his son, who later committed suicide.

Since then there has been a parade of white-collar con artists whose greed has also done them in, including Earl Jones from Canada and Lou Perlman and R. Allen Stanford from the United States, to name a few.

It was inevitable that in the world of high-stakes investments the collapse of financial empires would impact the milieu of high net worth divorce. Two such cases have wound their way through the New York divorce courts.

One case involves commodities trader Stephen Walsh who defrauded investors of more than $550 million in a thirteen-year Ponzi scheme. While hundreds of innocent investors lost everything, Mr. Walsh’s wife, Janet Schaberg, cashed in during her divorce from Walsh, which predated the demise of his phony financial firm.

While admitting that Ms. Schaberg was innocent, the U.S. Securities Exchange Commission went after her money alleging that her net worth was largely as a result of the fraud her husband had perpetrated during their marriage. As a result almost $8 million in cash was frozen pending the outcome of the SEC’s lawsuit.

Ms. Schaberg won the lawsuit which enabled her to retain the assets she acquired in her 2009 divorce. The New York Court weighed the competing interests of an innocent spouse of a scam artist against the rightful owners of the funds, who had been taken in by a sophisticated fraud.

In ruling in her favour, the Court compared her with an architect who was paid to build a home for a thief. The architect would not be forced to disgorge the funds he had received from the thief and neither should Ms. Schaberg.

In another New York courtroom this week, the final chapter in the Steve Simkin/Bernie Madoff case was written.

Steve Simkin is a prominent real estate lawyer in New York City with blue-chip law firm Paul, Weiss. He and his wife Laura Blank separated in 2002 after 30 years of marriage and entered into a separation agreement in 2006 that divided equally their significant assets including a home in Scarsdale, an apartment in Manhattan and a stock portfolio managed by Bernard L. Madoff Investment Securities. Simkin’s Madoff account statement showed a value of $5.4 million and he paid his wife about $2.7 million as her fifty percent share of the asset.

To fund the payment to her, he liquidated a portion of his Madoff account, retained the balance and continued to operate this account with Madoff.

In 2008 Mr. Simkin learned he was a victim of Maddof’s criminal scheme and there was no account with Madoff’s company. The statements Simkin relied on were fraudulent. Simkin filed a lawsuit seeking to recover the funds he paid his wife for her share of the portfolio. His lawyer argued that Ms. Blank had received a “windfall” and on the basis of a “mutual mistake” the agreement should be varied and Mr. Simkin should receive reimbursement from his ex-wife.

A Manhattan trial judge disagreed and tossed out Simkin’s lawsuit. She ruled there had been no mistake, as at the date of the separation agreement the account held funds, a portion of which were used to payout Ms. Blank.

On appeal the Court revived Mr. Simkin’s suit ordering a new trial, but this week Judge Victoria Graffeo ruled in Ms. Blank’s favour, unwilling to upset the agreement both parties had entered into in good faith.

The rationale is sound for several reasons, not the least of which is the righteous preclusion of a former spouse with investment or real estate losses from looking to his or her ex to regain assets already divided between them, because of changes in the marketplace.

There is a reason why family lawyers remind their clients that “a deal is a deal”.

Americans are crazy about their college ball and more than a few colleges earn huge profits from their basketball and football programs. In fact, it is college ball that pays for other college athletic programs that are not as high profile including swimming, fencing, gymnastics, rowing, and many others.

Where there is money you can usually find someone who can’t resist taking some for themselves, as in the case of associate director of athletics at the University of Kansas, Ben Kirtland.

Kirtland and a few other good ol’ boys at U of K, stole over 20,000 football and basketball tickets over a four-year period until they were caught in 2010 by internal auditors and charged with conspiracy, wire fraud and other similar offences. Kirtland and his co-conspirators sold the tickets through brokers causing losses to the school and reaping millions for themselves.

Mr. Kirtland was sentenced to 57 months in jail and ordered to pay $1.29 million in restitution to the university and forfeit $2 million to the government.

The Kirtland’s owned a home valued at $400,000 that was liened by the university to ensure that the Kirtland’s assets were not disposed of in contemplation of the university seizing his assets to pay civil and criminal restitution orders.

However, the Kirtland’s tried to pull a fast one. Ben Kirtland was confronted about the fraud and resigned from the university in April 2010. In November 2010 his wife Mary Jean Kirtland filed for divorce. In February 2011 her husband settled a civil lawsuit with the university, plead guilty to the charges and was well aware of the monetary consequences that would accompany his criminal behavior.

In April 2011 the Kirtland’s executed a settlement agreement that provided for a transfer of the family home to Mary Jean Kirtland. In May 2011 her husband was sentenced.

Ms. Kirtland’s lawyer made an application to release the lien on the home suggesting his client was another victim of her husband’s scheme and that the house transfer was legitimate. The government disagreed and refused to remove the lien.

A lawsuit is now pending against the Kirtland’s for the fraudulent transfer of the home to avoid monetary penalties they knew were coming.

It seems difficult to believe that hundreds of thousands of dollars flew through Mr. Kirtland’s coffers without his wife knowing about it. Or perhaps she was willfully blind?

Karen and David Zilkha’s marriage ended in messy divorce proceedings that included spousal abuse, restraining orders, an ongoing battle over their nine-year old twins and a SEC investigation.

Their marriage began in 1998 in Washington State where Mr. Zilkha worked for Microsoft. By 2001 the family had moved to Connecticut and a new job for Mr. Zhilka as a trader with hedge fund Pequot Capital Management. By 2003 their marriage was over and the divorce wars began. Eventually the financial aspects of their divorce were completed with Ms. Zilkha receiving $750,000.00 in assets including the family home.

The conflict started up again in 2008 when child support was to be reviewed. Mr. Zilkha filed updated financial information which included disclosure of a sum of $2.1 million. His ex-wife and her lawyer were mystified about the emergence of this asset, but then Ms. Zilkha remembered that before the collapse of the marriage, her husband had told her that he was negotiating a payment from Pequot.

Ms. Zilkha’s attorney knew that her client had kept the family computer and wondered if there was information about this money in old emails. What she found turned the case from a high conflict divorce case to a Securities Exchange Commission investigation of insider trading.

Emails retrieved from the computer hard drive provided proof that Mr. Zilkha had obtained confidential information from a former colleague at Microsoft that led to Pequot selling Microsoft shares with a payout to Pequot of $14 million.

Investigators at the SEC had long suspected that Mr. Zilkha had been involved in insider trading but with no “smoking gun” the investigation had languished.

CEO of Pequot, Arthur Samberg and Pequot paid fines and penalties to settle the case amounting to $28 million. Mr. Samberg, once the world’s largest hedge fund manager, sold the assets of Pequot and shut it down. Mr. Zilkha faces administrative charges with respect to his role as “tipper”.

Did Ms. Zilkha eventually get her child support? Don’t know, but under new legislation she received a reward of $1 million from the SEC for providing the evidence that was needed to convict.

Two Pennsylvania Judges have been locked up for 17 years and 28 years for incarcerating 4,000 innocent young offenders in exchange for $2.8 million dollars in payments from the owner of two private, for-profit, youth correctional centres.

Judge Michael Conahan, who plead guilty, received a 17-year sentence, while his co-conspirator Judge Mark Ciavarella, who denied his guilt throughout a lengthy trial, was found guilty and sentenced to 28- years imprisonment.

Conahan’s lawyer advised the media that his client was “bitterly disappointed” with the lengthy sentence but would not appeal. During the sentencing former Judge Conahan apologized to the children and their families saying “My actions undermined your faith in the system and contributed to the difficulty in your lives. I am sorry you were victimized.”

The Pennsylvania Supreme Court has now overturned 4,000 of the juvenile convictions.

Conahan and Ciavarella initially plead guilty to honest services fraud and tax evasion and plea-bargained a 7-year sentence, however, the trial judge refused to accept the plea, ruling that neither
offender had accepted responsibility for their actions.

The judicial scam unravelled when reputed mob boss William “Big Bully” D’Elia was arrested on charges of witness tampering, solicitation of murder and conspiracy to launder drug money and turned government informant. D’Elia and Judge Conahan were buddies.

D’Elia sang like a canary after he was arrested and no wonder, he faced 30-years in prison and a $750,000 fine. He was sentenced to nine years in jail which was later reduced by 21-months for his testimony in another high-profile Pennsylvania case involving casino owner Louis DeNaples and his priest Father Sica.

Conahan must also pay fines and restitution of almost $900,000 and will likely be sued civilly by his victims’ parents.

Was it worth it? I think not. Contrary to Hollywood hype, greed is never good. All the world’s religions condemn greed: “For the love of money is a root of all evil.” 1 Timothy 6:10

The Canadian and American justice systems have many similarities but they also differ dramatically in the area of bail for those charged with criminal offences.

While both jurisdictions favour the release of alleged offenders on specific conditions pending trial, including the posting of bail, bounty hunters and bail bondsmen proliferate in the United States. In Canada, bail bondsmen and bounty hunters are illegal and to world-wide critics of the practice, immoral and discriminatory.

And Canada is not alone. Most countries, with the exception of the Philipines, will charge a bounty hunter with kidnapping if they remove a citizen, albeit a fugitive, from their soil. The authority of a bounty hunter does not extend beyond the jurisdiction of his or her home country or state and even in America, where several states have outlawed bounty hunters, including Illinois, Kentucky, Wisconsin and Oregon, a fugitive-finder must exercise extreme caution.

That is why the world’s best known bounty hunters, Duane and Beth Chapman, aka Dog the Bounty Hunter’s, recent threats to capture Oscar-winning actor Randy Quaid, now living in Vancouver, can’t be taken for more than a publicity ploy timed for the start of their new season on A&E television.

Dog surely knows that Canada and the U.S. entered into a memorandum of understanding in 1988 that provides there will be no cross-border kidnapping of Canadians.

He certainly is intimately familiar with the aftermath of interfering with a U.S. citizen on foreign soil after the clandestine removal of sex offender and Max Factor trust-fund beneficiary, Andrew Luster from Mexico. Luster was successfully returned to California to serve his 124-year sentence. Dog went home to Hawaii and was later arrested by police as a result of an extradition request by the Mexican government. After a night in jail he posted bail and eventually the Mexican authorities dropped the criminal charges against him. It made for good television.

There are, however, clever ways to fool a fugitive into slipping back into the United States so that a legal capture can occur. Businessman Fred J. Gilliland fled the United States after his massive securities frauds were uncovered. He escaped to West Vancouver where it was reported he lived in the lap of luxury. Gilliland had ripped off hundreds of people and had more than just a few enemies as a result of his criminal behavior. One of his enemies was a British Columbia resident who alleged he had been suckered into one of Gilliland’s fraudulent schemes and lost $200,000 dollars.

Brian Van Vlack, who described himself as a private investigator, befriended Gilliland, eventually luring him for lunch to Point Roberts, a sleepy beach town, that happened to be a sliver of land that was part of the State of Washington. Just as lunch began, American police emerged, arrested Gilliland and returned him to Florida to face the music.

I suspect that Randy Quaid will not be as gullible or cocky as Gilliland, and after all, why would Quaid visit the U.S? He has pretty much burned all his bridges there.